New research today from the Tax Justice Network reveals tax evasion costs 145 countries, representing over 98 per cent of global GDP, US$3.1 trillion a year.
New research today from the Tax Justice Network reveals tax evasion costs 145 countries, representing over 98 per cent of global GDP, more than US$3.1 trillion a year. The cost to Britain is $69.9 billion – 56% of the nation’s healthcare spend.
The report, The Cost of Tax Abuse: A briefing paper on the cost of tax evasion worldwide (pdf), shows Europe as a whole loses 87% of its total healthcare budget to tax evasion, with Africa losing nearly all its budget (98%) and South America a staggering 139%. One hundred and nineteen of the 145 countries surveyed lose more than half their healthcare budget to tax evasion.
As the table below shows, the UK is in the top ten countries losing to tax evasion:
More than $1 in every $6 earned in the world is not subject to tax because those earning it have deliberately ensured that their income is hidden from the world’s tax authorities – in Greece and Italy, where economic collapse currently looks possible, more than €1 in €4 is hidden in the shadow economy.
John Christensen, director of the Tax Justice Network, says:
“Tackling tax havens is a crucial part of ending the culture of tax evasion. Tax evasion is crippling public finances across the world but governments aren’t doing nearly enough to end this cancer.
“Tax havens are engaged in economic warfare against the tax regimes of sovereign countries, and these estimates reveal the human cost in terms of the impact on health services.”
With Tax Research UK’s Richard Murphy adding:
“The findings add a new policy agenda to public debate on the world’s financial crisis. For example, Italy loses €183 billion to tax evasion a year. Its current debt of €1.9 trillion represents just over 10 years tax of tax evasion on this basis.
“If only more had been done to tackle rampant tax evasion, Europe would not be facing a crisis today…
“Tax havens can be beaten using three simple measures:
• First we demand that all tax havens put details of the ownership of all companies and trusts located there, and the accounts of those organisations, on public record;
• Second we demand that all multinational companies publish accounts that reveal their use of tax havens;
• Last, we believe that all tax havens should be required to exchange information each year on the income recorded within them belonging to the citizens of other countries with the places where those people really live.
“These measures would shatter the secrecy of tax havens for good, and that means those committing tax crimes will no longer have places to hide the proceeds of their crimes. Nothing could make a bigger contribution than this to solving the world’s financial crisis right now.”
The findings come as the Tax Justice Network launches Tackle Tax Havens, a new campaign highlighting the critical role these secretive states play in corrupting the global economy.
The research demonstrates the importance of tackling tax evasion, tax avoidance and the tax havens that help the immoral super-rich from contributing to the services that directly benefit them – from the health and education systems their workers rely on, to the roads that transport their goods, to the courts that enforce their contracts, to the police who protect their property.
As the report concludes:
Tax evasion is always a crime. Tax evasion on this scale is not just a personal crime though: it then becomes both a crime against society and a crime against democracy.
That is because both societies and democracy can fail as economies falter when the demands for government services increase in times of economic crisis but the people willing to make payment for them are too few in numnber.
Tax evasion is at the core of the crisis in the world’s economies as a consequence. It is our suggestion that tackling evasion is one of the necessary conditions for solving that crisis and at the same time providing the healthcare, education, pensions and other services the people of the world need.
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• Taking on the tax havens – Chris Jordan, October 16th 2011
• Exclusive: 98 of the FTSE 100 companies are addicted to tax havens – Asha Tharoor, October 11th 2011
• Profile of Richard Murphy, scourge of the tax avoiders – James Leppard, September 24th 2011
• Lucas launches campaign to end £16bn tax evasion scandal – Shamik Das, March 17th 2011
• The role Britain plays in facilitating global tax evasion – Lydia Prieg, January 31st 2011